Investment Programming: Prioritization

and Investment Programs

CDP+ Course 4

“Matino, Mahusay, at Maaasahan”

 Course Objectives

You are expected to develop the following competencies after this

course:

 Screen and evaluate programs and projects based on various

implementation requirements
 Identify priority programs and projects responsive in the realization of the
locality’s development thrust and agenda
 Utilize different tools and techniques to objectively prioritize and schedule
effectively the implementation of programs and projects based on their
technical, financial, and institutional aspects
 Course Outline

Module 1: LDIP Overview and Pre-LDIP Activities

Module 2: LDIP Stream 1: Screening and Prioritization

Module 3: LDIP Stream 2: Determining Investment Financing

Potential

Module 4: LDIP Stream 3: Formulating the LRMP and Financing

Plan, and the LDIP, AIP, and the Annual Budget
 Course Overview
Major Activities
1. Prepare a project brief for each
PPA.
2. Conduct further screening and
prioritization of the Structured
List of PPAs.
3. Determine New Investment
Financing Potential.
4. Formulate the corresponding
Local Resource Mobilization
Program (LRMP) and Financing
Plan.
Output Documents
1. Project Brief for Each PPA
(Form 3b)*
2. Ranked List of PPAs for
Investment Programming (Form
3a)*
3. Projection of New Development
Investment Financing Potential
(Form 3c)*
4. Local Resource Mobilization
Program (℅ Local Treasurer)*
5. Summary of Medium-Term
Financing Plan (Form 3d)*
6. LDIP Summary Form (Form 3e)
7. Annual Investment Program
(AIP) Summary Form
Lead Office/Persons
1. City/Municipal Planning Team
a. Participate in the
prioritization activities and
ensure that all sectors are
properly represented.
b. Ensure that the
prioritization process is
diligently and judiciously
done.
 Course Overview
Major Activities Output Documents Lead Office/Persons
1. Prepare a project brief for each 1. Project Brief for Each PPA (Form Local Finance Committee
PPA. 3b)* a. Formulate a sound and objective LRMP and Financing Plan
2. Conduct further screening and 2. Ranked List of PPAs for Investment for the LDIP.
prioritization of the Structured Programming (Form 3a)* b. Coordinate with the Bureau of Local Government Finance
List of PPAs. 3. Projection of New Development (BLGF), DBM, or other NGAs for assistance on forecasting
3. Determine New Investment Investment Financing Potential if necessary.
Financing Potential. (Form 3c)* c. Coordinate closely with the planning team in the
4. Formulate the corresponding 4. Local Resource Mobilization preparation of the LDIP.
Local Resource Mobilization Program (℅ Local Treasurer)* d. The Local Treasurer in consultation with the BLGF will
Program (LRMP) and Financing 5. Summary of Medium-Term generate Medium-Term Revenue Forecasts (3-6 years) for
Plan. Financing Plan (Form 3d)* the IRA, own-source revenues, borrowings, and other
6. LDIP Summary Form (Form 3e) grants and in consultation with an LDC prepare the LRMP
7. Annual Investment Program (AIP) and Financing Plan.
Summary Form e. The Local Budget Officer in consultation with the
  Department of Budget and Management will prepare the
*These five (5) documents combined Medium Term Forecasts of Current Operating Expenses
with the LDIP Summary Form will for Personal Services (PS), Maintenance and Other
comprise the LDIP of the Operating Expenses (MOOE), and Capital (minor) Outlay
City/Municipality. (CO), collectively the Current Operation Expenses (COE).
The methodology to be followed for preparing the Medium
Term Forecasts of Current Operating Expenses is in the
BOM 2016.
 Course Overview
Planning Scenario Process
Scenarios 1, 2 and 3 1. Prepare project brief using the preparation template 3b as a guide.
2. Screen and prioritize PPAs from the structured list using suggested
screening tools.
a. Screen the PPAs in terms of conflict, compatibility, and
complementarity using the CCC matrix.
b. Screen project impacts to resources using the Resource Impact
Matrix.
c. Through a participatory workshop, rank projects based on the
criteria for determining level of urgency of programs using the
Level of Urgency Test.
d. Screening using risk sensitive vision and/or development goals of
the LGU using the Goal Achievement Matrix (GAM).
 Course Overview
Planning Scenario Process
Scenarios 1, 2 and 3 3. Determine investment potential.
a. Collect revenue and operating expenditure data and determine
historical trends. Analyze DRRM and CCA/M expenditures.
b. Project future recurring revenue and operating expenditure levels.
c. Compute funds available for financing new investments.
4. Formulate LRMP and Financial Plan
d. Local Finance Committee composed of the C/MPDC, Budget Officer
and Treasurer should crossmatch ranked PPAs list with the available
resources.
e. In case funding from outside sources is necessary, determine which
financing options to pursue.
f. Prepare the Local Development Investment Program. Tag climate
change adaptation and mitigation PPAs in the LDIP and AIP.
 Course Overview

Planning Scenario Process

Scenario 4 ● Check if the PPAs in the AIP and LDIP are risk informed.
● if the PPAs are not risk-informed, follow steps for
scenarios 1-3.
EP Formulation in the CDP Process
Module 1: LDIP Overview and Pre-LDIP
Activities
CDP+ Course 4

“Matino, Mahusay, at Maaasahan”

 KEY CONCEPTS

LOCAL DEVELOPMENT FUND

• 20% of the IRA

• Non-office maintenance and other
operating expenses
• Non-office capital outlay
• Does not include that portion of the
local budget which is consumed by the
local government machinery for
salaries, wages and other personnel
costs, office maintenance and other
operating expenditures, and office
capital outlay
 KEY CONCEPTS

INVESTMENT PROGRAM
• In public finance, an investment program is a tool for utilizing the
investible portion of the local budget

• Consists of: (a) final list of priority projects and (b) programming of
financial resources to fund identified programs and projects

• The investible portion of the local development fund is that component

of the local budget which will be earmarked for financing the priority
programs and projects, while the remaining portion will go into
financing the costs of functions and services of the different LGU offices
and departments.
 KEY CONCEPTS

LOCAL DEVELOPMENT INVESTMENT PROGRAM

• the principal instrument to implement the Comprehensive Development

Plan.

• serves as the link between the plan and the budget: “Local budgets shall
operationalize approved local development plans” (Sec. 305 (i), RA 7160)
• translates the CDP into programs and projects and selects those that will
be picked up by the LGU for funding in the annual general fund budget or
through special fund generation schemes

• has a time frame of three (3) years and is translated into Annual Investment
Program (AIP)
 KEY CONCEPTS

LOCAL DEVELOPMENT INVESTMENT PROGRAM

• Helps LGUs carry out their mandates and responsibilities (Sec. 16 & 17
of LGC). It consists of:
 Projects that are in pursuance of the LGU’s exercise of its powers and discharge of its
duties and functions necessary for effective governance and essential for the
promotion of the general welfare;

 Projects that are in pursuance of functions traditionally performed by national

government agencies but which have already been devolved to LGUs; and

 Projects that are necessary, appropriate or incidental to the effective and efficient
provision of the basic services and facilities enumerated in Section 17 of RA 7160.
 Fiscal Authority of the LGU

1. Raise necessary funds, through levy of taxes, fees and charges, use of
productive assets, and use of local enterprises

2. Entitled to a share in national taxes and proceeds from the utilization of

national wealth (Sec. 18 & 22 of LGC)

3. Secure financial grants and donations in kind (Sec. 23 of LGC)

4. Incur loans or other forms of obligations, e.g., BOT schemes (RA 6957,
Sec. 302, RA 7160)
 Streams in LDIP Preparation

Preparing the LDIP consists of three (3) streams:

• Stream 1 involves the preparation of a ranked list of programs and

projects with their individual and cumulative cost estimates.

• Stream 2 has to do with determining available funds for investment;

and

• Stream 3 necessitates matching the fund requirements with projected

funds available and deciding on financing options should the funds
available are insufficient.
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs

1. Classify projects from non-projects and legislations (Course 3)

2. Determine Project Ownership (Course 3)
3. Prepare Project Brief (CDP Form 3b)
4. Screen Random List of Projects
• Conflict-Compatibility-Complementarity (CCC) Martrix
• Resource Impact Matrix
• Level of Urgency
5. Finalize Structured List of PPAs (CDP Forms 2a and 2b)
 Pre-LDIP: Compilation of Program and Project Ideas

1. LCE calls for Project Ideas.

2. Compile project ideas or proposals
3. Consolidate project ideas of proposals by sector.
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
1. Prepare
Project Brief
(CDP Form 3b)
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
CCC Matrix

This matrix shows projects that complement, are compatible or conflict

with other projects.
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
Resource Impact Matrix
Each proposed project is examined in terms of its demand or impact on the
natural, human, infrastructure, and financing resources of the LGU.
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
Resource Impact Matrix
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs

Level of Urgency

Subjects the different proposed projects to some indicators of necessity,

it is used to prioritize projects that are sensitive in terms of time and
importance to maintain or push forward the functioning of the LGU
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
Level of Urgency
❑ Cannot be reasonably be postponed
❑ Would remedy conditions dangerous to public health, safety & welfare
URGENT ❑ Needed to maintain critically needed programs
❑ Needed to meet emergency situations

❑ Required to complete or make usable a major public improvement

❑ Required to maintain minimum standards as part of on-going programs
ESSENTIAL
❑ Desirable self-liquidating projects
❑ External funding is available
 Pre-LDIP: Initial Screening of PPAs and Finalization of
Structured List of PPAs
❑ Should be carried out to meet clearly identified and anticipated needs
NECESSARY ❑ Needed to replace obsolete or unsatisfactory facilities
❑ Repair or maintenance projects to prolong life of existing facilities
SB to enact
❑ Needed for expansion of existing projects
DESIRABLE ❑ Designed to initiate new programs considered appropriate for a progressive
community
❑ Can be postponed without detriment to present operations if budget cuts are
ACCEPTABLE
necessary
❑ Recommended for postponement or elimination from immediate consideration
DEFERRABLE in the current LDIP
❑ Questionable in terms of over-all needs, adequate planning or proper timing.
 Module 2: Stream 1: Screening and
Prioritization of Structured List of PPAs
CDP+ Course 4

“Matino, Mahusay, at Maaasahan”

 Goal Achievement Matrix

1. Call and organize a consultation/workshop with participants

representing various societal sectors in the LGU,

2. Use the list of projects from the Structured List of PPAs.

a. Review the list and make sure your projects are projects; not
services, not legislation.
b. Review the list and make sure your projects are LGU-owned or
co-owned with the national government or private sectors.

3. Using the Goals Achievement Matrix (GAM) Form use the goals
generated from CDP step 3 and assign weights to each
goal based on the perceived importance of each goal to the
interests of the sector a group represents. The numerical total of
the weights should be 1 or 100%.
 Goal Achievement Matrix

4. Rate each proposed project based on how it contributes to the

fulfillment of your goal
 Goal Achievement Matrix

4. Multiply the rating you gave by the corresponding weight of the goal and
enter the product (score) in the appropriate cell. Add the scores for each
project proposal.
5. Using the suggested form below, add all sectoral group scores as
presented in the summary of GAM scores.
6. Finally, arrange projects according to their total scores.
 Simulation Exercise!

TASK:
1. Prepare Project Brief
2. Initially Rank Random List of PPAs
3. Rank PPAs using Goal Achievement Matrix (GAM)

FORM: CDP Form 2A and 2B: Structured List of PPAs

CDP Form 3B: Project Brief
CDP Form 3A: Ranked List of PPAs
DURATION: Three and a half (3.5) hours
CDP Form 3a: Ranked List of PPAs
Module 3: Stream 2: Determining
Investment Financing Potential
CDP+ Course 4

“Matino, Mahusay, at Maaasahan”

 LDIP Stream 2 Overview
• Focuses on determining available funds to fund priority PPAs identified
in Stream 1

• Visualize LGU’s capacity to finance PPAs listed in the ranked list of

PPAs

• Highlights role of LGU’s Local Finance Committee (LFC)

• LGU finance depends on the following:

• Revenue level of the LGU
• Level of recurring local government operating expenditures
• Current public debt level
• Statutory debt ceiling
• Potential sources of additional revenue available for investment
project financing
 Step 1: Collecting Appropriate Revenue Data and
Determining Historical Trends
Revenue
• any inflow of funds to the LGU, regardless of whether the
source is repayable or not.
• LGUs derive their revenues from local and external sources.
• Local sources include tax revenues from the real property tax
and the business tax, and non-tax revenues from fees,
receipts from government business operations, and proceeds
from the sale of assets.
 Step 1: Collecting Appropriate Revenue Data and
Determining Historical Trends

Process
1. Collect data on revenue and expenditures of your LGU for the
past 3 -5 years.
2. Analyze your LGU’s historical trends in terms of the average
annual growth rate.
3. The analyses of current levels must distinguish between
recurring revenue and non-recurring sources.
Step 1: Collecting Appropriate Revenue Data and
Determining Historical Trends
Time Series Record of Local and External Revenue
Sources
 Step 2: Collecting Appropriate Operating Expenditure
Data and Determining Historical Trends

• Analyze Expenditure Pattern

• Operating Expenditure
• Personnel Services
• Maintenance and Other Operating Expenses (MOOE)
• Office Equipment
• Miscellaneous Expenses

• LGU Expenditure Pattern must be analyzed using historical data

 Step 2: Collecting Appropriate Operating Expenditure
Data and Determining Historical Trends

Process

1.First, collect the data on the following operating expenditures:

1.Personal Services, including social charges (PS)
2.Maintenance and other operating expenses (MOOE)

2.Historical analyses for the following expenditure items need to be done using the
suggested form (Time Series Record of LGU Operating Expenditure)
1.General Public Services
2.Social Services
3.Economic Services
4.All Others
Time Series Record of Operating Expenditures
Obligated Debt Service Expenditure
 Step 3: Establishing Structural Relationships of Revenue
and Expenditure to Population and Economic Development

Consider the following key factors that may affect your

projections:

1. the overall national and regional economic picture including

development trends;

2. demographic shifts; and

3. changes in the local market, particularly in the local labor

market.
 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Process
Future recurring levels can be projected based on a careful assessment of all
probable factors that affect each revenue source.

1.RPT collection should be projected separately because of its large

contribution to LGU revenue sources; and because real properties will be
the main beneficiary of LGU investments in terms of increased values.
2.Business fees and licenses, other taxes, services and operations, and all
others can be projected using either the historical growth rates (with or
without adjustments) or using computed elasticities and assumed per
capita income growth rates.
3. Project the future normal recurring expenses using the recommended
techniques.
 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Tool
1. To project the future normal recurring expenses, you may use either of the
following techniques:

• the historical 3 to 5 – year annual average expenditure increase; or

• the historical average expenditure per unit of output in the case of LGU
business enterprises.
Projection of Property Tax Revenue
Projection of Total Revenue
Projection of LGU Operating Expenditure
Growth Scenarios
 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Tool
2. Compute the financial surplus available for the financing of new
investments.

The following computational procedure can be used to establish the new

investment financing capacity of the LGU:

Project Revenues
Less: Projected Operating Expenditures
Less: Existing Debt Service Requirements
Total: Amount Available for Investment Financing
Projected Local and External Revenue Sources
 New Development Investment Financing
Potential 2018-2023
No. ITEM 2017 (Actual) 2018 2019 2020 2021 2022 2023
Projected Total
1.0 230,723,175.00 366,200,754.74 413,806,852.86 467,601,743.73
Revenues 260,717,187.75 286,788,906.53 324,071,464.37
less
Projected
2.0 Mandatory 214,853,832.95 292,827,820.20 330,126,104.98 363,841,828.50
214,568,538.20 235,959,872.39 260,717,405.80
Expenditures
Operating
2.1 128,617,674.20 220,974,032.46 254,120,137.33 284,614,553.81
Expense 150,482,678.81 170,045,427.06 192,151,332.58
2.2 MOOE
2.3 Capital Outlay 74,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00
50,000,000.00 50,000,000.00 50,000,000.00
2.4 Debt Service 5,315,625.00 5,847,187.50
700,000.00 1,050,000.00 1,575,000.00 2,362,500.00 3,543,750.00
Other Contractual
2.5
Obligations
5% Calamity
2.6 11,536,158.75 18,310,037.74 20,690,342.64 23,380,087.19
Funds 13,035,859.39 14,339,445.33 16,203,573.22
New Development
Investment
3.0 73,372,934.54 83,680,747.88 103,759,915.23
Financing 46,148,649.55 50,829,034.14 63,354,058.58
Potential (1.0-2.0)
Internal Revenue
4.0 211,810,404.00 310,111,612.50 341,122,773.75 382,057,506.60
Allotment (IRA) 232,991,444.40 256,290,588.84 281,919,647.72
20% Local
Development
5.0 42,362,080.80 62,022,322.50 68,224,554.75 76,411,501.32
Fund (20% of 46,598,288.88 51,258,117.77 56,383,929.54
IRA)
LDF Compliance
6.0 1.23
Ratio (3.0/5.0) - 0.99 0.99 1.12 1.18 1.36
Module 4: Stream 3: Formulating the LRMP
and Financing Plan and the LDIP
CDP+ Course 4

“Matino, Mahusay, at Maaasahan”

 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Formulating the Financing Plan
Step 1: 1st Round Matching – The purpose of this matching is to
determine:
a. how many of the approved projects can be funded from regular sources
for the 3 – year period; and

b. how many may

have to be financed from other sources.

The remaining projects that cannot be funded out of recurring sources and
the corresponding cost should be transmitted to the Local Finance
Committee.
 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Formulating the Financing Plan
Step 2: LDC evaluates the ranked list of projects with their individual
and aggregate cost estimates.

a. The LDC approves the final list of projects when a proper match is attained
between total project cost and available funds on a year-by-year basis
through a vote or consensus.

b. The LPDO then prepares the investment program.

c. If the aggregate cost is more than the amount of available investible

funds, the LDC deliberates on and decides what financing approach to take.
Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
 Step 4: Projecting Future Recurring Revenue and Operating
Expenditure Levels, and Computing the Financial Surplus
Available for the Financing of New Investments
Formulating the Financing Plan
Step 2: LDC evaluates the ranked list of projects with their individual and
aggregate cost estimates.

a. The LDC approves the final list of projects when a proper match is attained
between total project cost and available funds on a year-by-year basis through
a vote or consensus.
b. The LPDO then prepares the investment program.
c. If the aggregate cost is more than the amount of available investible funds,
the LDC deliberates on and decides what financing approach to take:
• Conservative Approach
• Developmental Approach
• Pragmatic Approach
Conservative vs Development Approach
LGU Financing Options
 Medium-Term Financing

Process
After you select the Financing Approach for your LGU, the following steps shall be taken:

1.Prepare the initial three-year or, if possible, two three-year investment programs and
submit the draft LDIP to the LCE. This includes the preparation of the following
documents:

a. Preparation of the Summary of Medium-Term Financing Plan (Form 3d)

b. Preparation of the LDIP Summary Form (Form 3e) and Electronic Local
Development Investment Program (E-LDIP)
c. Compilation of the LDIP output documents:
i. Project Brief (Form 3b)
ii. Ranked List of PPAs for Investment Programming (Form 3a)
iii. Projection of New Development Investment Financing Potential (Form 3c)
iv. Local Resource Mobilization Program (℅ Treasurer)
v. Summary of Medium-Term Financing Plan (Form 3d)
vi. LDIP Summary Form (Form 3e)
Medium-Term Financing Plan (Form 3d)
 Local Development Investment Program (LDIP)
(CDP Form 3e)
CDP Preparation Template Form 3.d. LDIP Summary Form
LOCAL DEVELOPMENT INVESTMENT PROGRAM
Summary Form

for Planning Period: 2017-2022

Years Covered: 2017-2019

City/Municipality: ___________________________________

o No Climate Change Expenditure (Please tick box if your LGU does not have any climate change expenditure)

Amount of Climate Change

Scehdule of Implementation Amount (In Thousand Pesos)
Expenditure (In Thousand Pesos)
AIP Implementing
Program/ Project/ Activity Funding Source
Reference Office/ Expected Output Maintenance
Description (2) (7) Climate
Code (1) Department (3) Personal and Other Capital Climate Climate
Completion Total Change
Start Date (4) Services Operating Outlay Change Change
Date (5) (8+9+10) Typology
(PS) (8) Expenses (10) Adaptation Mitigation
Code
(MOOE) (9)

Prepared by: Attested by: Certified correct and approved by the LDC:

Local Planning and Development Coordinator Local Budget Offi cer Local Treasurer City/Municipal Mayor/LDC Chairman
 Preparing the AIP

In accordance with the provisions of JMC No. 001 series of 2007, the LDC shall
cull out the AIP from the current slice of the LDIP, which upon approval of the
Sanggunian, shall serve as the basis for preparing the Executive Budget.

The LDC shall endorse the AIP to the local budget officer for the budget
preparation and in determining the annual budgetary allocations for PPA vis-à-vis
allocations for other purposes as indicated in the AIP Summary Form.
Preparing the AIP
THANK YOU!